The 2027 John Locke Economics question asks: "What are the consequences of economic illiteracy among the general population?" It wants two things, a precise definition of "economic illiteracy" and a traced chain from that illiteracy to harm. The private costs (money lost through poor saving, borrowing and investing) are the best measured. The public costs are more contested, because the gap between voters and economists could be ignorance, bias or distrust, and each points to a different answer. Below are three readings to start with and the main arguments to weigh.
The question at a glance
| Category | Economics |
| Exact wording | "What are the consequences of economic illiteracy among the general population?" |
| Word limit | 2,000 words for the essay body, excluding endnotes and bibliography |
| Who can enter | Any student under 19 on the submission deadline, from any country; under-15s are judged separately in the Junior category |
The 2027 questions were shown by the John Locke Institute at its October 2026 events; the Institute's website will carry the official list. The rules above are the 2026 rules, which we expect to carry over.
What the question is really asking
"Economic illiteracy" is the term you have to settle before you write anything else, and it can mean at least three things:
- Not knowing facts or concepts. The person cannot say what inflation does to savings or how compound interest works. This is the reading behind most financial-literacy surveys.
- Systematic bias. The person knows plenty but reasons wrongly in predictable directions: suspicious of markets and foreign trade, convinced jobs matter more than output, sure that things are getting worse. This is Bryan Caplan's reading.
- Rejecting the economist's frame. The person understands the argument but does not believe the assumptions it rests on: that the government will rebate a tax, that losers from trade will be compensated, that "all else equal" holds. Paola Sapienza and Luigi Zingales argue this explains much of the gap between experts and the public.
These are different problems with different consequences and different cures. An essay that never decides which one it means will drift.
"The general population" narrows the question. It is about ordinary adults, as voters and as households, not about policymakers or firms. So the two channels that matter are personal finance and democratic choice.
"Consequences" asks for a causal chain. "People are economically illiterate and economies do badly" is a correlation. The judges want a mechanism: illiteracy leads to a specific decision (a payday loan, a vote for a tariff, rejection of a carbon tax), which leads to a specific cost, borne by someone you can name.
The hidden assumption is that economists are right and the public wrong. The live controversy is whether that holds. If ordinary people have good reasons to doubt the assumptions behind an expert answer, then part of what gets called "illiteracy" is a judgement about trust. The consequences of that look quite different.
The trap
The most common way a strong student loses marks here is to treat financial literacy and economic literacy as the same thing. Most of what ranks for this question online does exactly that. It quotes a financial-literacy statistic (how many adults can answer a question about interest rates) and then jumps to claims about protectionism and populism.
These are separate skills with separate evidence. Financial literacy affects your own bank balance, and the research on it is careful and measurable. Economic literacy in the political sense is about beliefs on trade, prices and policy. A person can manage a pension perfectly well and still think "Buy American" rules create jobs. Keep the two channels apart, give each its own evidence, and then argue about how they connect.
The second trap is overclaiming causation. The financial-literacy literature finds strong associations between knowledge and wealth, but its own authors say the costs are substantial if the effects can be taken as causal. Repeat that caveat and you look like you know the field.
Three core readings
1. Sapienza and Zingales, "Economic Experts versus Average Americans"
Paola Sapienza and Luigi Zingales, "Economic Experts versus Average Americans," American Economic Review: Papers & Proceedings 103, no. 3 (2013): 636-642. Free PDF: kellogg.northwestern.edu.
These are the most useful seven pages you can read for this question. The authors put 19 policy questions from the University of Chicago's IGM panel of expert economists to a representative sample of about 1,000 American households. On average, agreement differs by 35 percentage points between the two groups. Then come the findings that make the paper essential. Telling ordinary people what "nearly all economic experts agree" barely changes their answers. On the carbon tax, the public understands the trade-off but does not trust the government to rebate the money. The authors conclude: "Economists answer them literally and take for granted that all the embedded assumptions are true, average Americans do not." Use it as your evidence that "illiteracy" is partly something else, or as the objection your essay has to beat.
2. Lusardi and Mitchell, "The Economic Importance of Financial Literacy"
Annamaria Lusardi and Olivia S. Mitchell, "The Economic Importance of Financial Literacy: Theory and Evidence," NBER Working Paper 18952 (April 2013), published in Journal of Economic Literature 52, no. 1 (2014): 5-44. Free PDF: nber.org.
This is the standard review of the household side. It sets out the three survey questions now used around the world (on compound interest, inflation and diversification) and reports that in the 2004 US Health and Retirement Study, among adults aged 50 and over, "only a third could answer all three questions correctly." It then gathers the evidence linking low financial literacy to less retirement planning, less stock-market participation and more high-cost borrowing such as payday loans, and it reports a model estimate that financial literacy can explain more than half of US wealth inequality. Use it for the private consequences, and quote its caveat that the costs are substantial "if the effects of financial literacy on financial behavior can be taken as causal."
3. Caplan, "The Myth of the Rational Voter"
Bryan Caplan, "The Myth of the Rational Voter," Cato Unbound, 5 November 2006: cato-unbound.org. The full argument is in his book The Myth of the Rational Voter (Princeton University Press, 2007).
Caplan's essay is the short version of the book and free to read. Using the Survey of Americans and Economists on the Economy, he argues that the public is biased, not merely uninformed: "Compared to the experts, laymen are much more skeptical of markets, especially international and labor markets." The book's description sets out four biases: noneconomists "underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse." The point that matters most for this question is aggregation. If errors were random they would cancel out across millions of voters, but biased errors "do not cancel each other out; they compound." His key line: "Rational ignorance cannot explain why people gravitate toward false beliefs, rather than simply being agnostic." Read the replies from Jeffrey Friedman and David Estlund in the same Cato Unbound issue for the counter-case.
Arguments to think about
Each of these can carry a 2,000-word essay. Pick the one you can defend against its strongest objection, and make sure your essay answers that objection directly.
Two channels, two verdicts. Split the question in two. In private life the consequences are large, measured and regressive: Lusardi and Mitchell link low financial literacy to high-cost debt, thin savings and lower wealth, and the people who understand least pay most. In public life the diagnosis changes. Much of the gap between voters and economists looks like distrust of economists' assumptions rather than missing facts, since telling people the expert view barely moves them (Sapienza and Zingales). The consequence there is a politics that cannot use the cheapest tools, such as a carbon tax, because they depend on promises voters do not believe.
Caplan's thesis, defended in full. Argue that the consequences are mainly political, and that systematic bias, not ignorance, is the cause. Use the Buy American and NAFTA gaps, the failure of expert information to move opinion, and Caplan's aggregation point to argue that democracies reliably choose protectionist and anti-market policies. The hard part is the carbon-tax evidence; you will need to argue that distrust of government is itself one of Caplan's biases.
The household-first thesis. Argue that the political story is overblown and the real consequence is private: lost savings, high-cost debt and wider wealth inequality. Lusardi and Mitchell's evidence carries this essay. The best objection is causation (perhaps literacy stands in for patience or family background), so spend your longest paragraph on why the association survives controls for education.
The "it isn't illiteracy" thesis. Argue that the main consequence of what experts call economic illiteracy is a crisis of trust, and that the label itself does harm by persuading economists that the public needs teaching rather than persuading. Sapienza and Zingales, plus Estlund on democratic authority, carry this line. You must still concede that some errors, like the stock-market result, look like plain mistakes.
Each of these needs a few economic ideas used precisely (opportunity cost, incentives, the counterfactual). Students who have not studied economics can pick them up in our Economics Scholar Foundations course, which runs before the main John Locke Essay Competition prep cohorts.
FAQ
Is the economic illiteracy question a good John Locke question to choose?
Yes, for a student who likes evidence. Very good data exist (surveys of experts and the public, financial-literacy studies across countries), and the question has a real dispute inside it: is the public ignorant, biased or distrustful? It suits someone who can define a term precisely and hold two kinds of consequence apart. It is a poor choice if you plan to write a general lament about people not understanding the economy.
What should I read for the John Locke economic illiteracy question?
Start with Sapienza and Zingales, "Economic Experts versus Average Americans" (2013), which is seven pages and free. Then read Bryan Caplan's Cato Unbound essay "The Myth of the Rational Voter" and the replies by Jeffrey Friedman and David Estlund in the same issue. For the household side, read Lusardi and Mitchell's review of financial literacy (NBER Working Paper 18952). Together they give you the definitions, the evidence and the counter-case.
What is the difference between economic literacy and financial literacy?
Financial literacy is knowledge for managing your own money: interest, inflation, risk and debt. Economic literacy is understanding how an economy works, such as trade, prices, incentives and the effects of policy. They overlap but have different consequences. Financial illiteracy mainly harms the individual and their household. Economic illiteracy in the political sense harms everyone, through the policies voters support. A strong essay treats them as two channels.
Do I need economics A level to answer this question well?
No. You need a handful of ideas used precisely: comparative advantage, the "compared to what?" counterfactual, the difference between a transfer and a loss, and why systematic errors do not cancel out the way random ones do. Our Economics Scholar Foundations course teaches exactly these ideas, using past John Locke questions as exercises, for students who have not studied economics formally.
Related
The John Locke Economics questions page carries this question with its trap and argument lines, alongside the 2026 Economics questions for practice. All ten 2027 questions, with the expected dates, are in our John Locke Essay Competition 2027 questions tracker. Two related 2027 questions: why are today's politicians so mediocre (Politics) and what the feminisation of politics is doing to policy (Public Policy). For the standard the judges reward, read our analysis of the published past winning essays.
